Finance and Controlling – Day 1

Introduction to SAP

Business without ERP
Customers 4
PP contacts Purchasing for raw material

Customer Calls to place order for a Car


Sales office/Inventory contacts PP

Production Planning

Sales office contacts Inventory




Business without ERP (Contd..)

Lets add some more Business Processes


Business without ERP (Contd..)
Where is my car What is this confusion What to manufactur e?? Whom to contact for status? What is Cost and profit

Production Planning


Shop floor Finance

Purchasing Vendors Inventory

Lets Deliver the end product to customer..
I did not order for a TRUCK!!!!

Dear Sir, Your Order…



Business without ERP (Contd..)


We are SORRY Sir



Overall Picture


Sales General Ledger





Production Planning Inventory Shop Floor Execution


Why Enterprise Architecture
• Why Enterprise Architecture ? – Numerous disparate information systems – Integrating the data becomes costly
• Time • Money • Resources

– Inconsistencies and duplication of data – Lack of timely information – Required: Central enterprise definitions – Required: Centrally controlled business change


Enterprise Structure – Integrating Business


FA Treasury GL AP Purchasing



Shop Floor Sales

Partner Systems

AR Plants




Enterprise Architecture - Benefits
• • • • • • • Eliminates the duplication, discontinuity and redundancy in data Increases the return on investment made on IT implementations Delivers quality information designed for the Enterprise as a whole Faster and cheaper Delivers quality information to produce a quality enterprise Satisfying Partners/Customers Reducing required manpower


Quiz Time

• What is the full form of SAP? • When was SAP founded?


Quiz Time • What is the full form of SAP?
Systems Applications and Products in Data Processing

• When was SAP founded?
Founded in 1972 by Wellenreuther, Hopp, Hector, Plattner and Tschira
– Renamed in 1977 – Before 1977 : Systems Analysis and Program Development (German : Systemanalyse und Programmentwicklung)


History of SAP
• Systems Applications and Products in Data Processing
– German : Systeme, Anwendungen, Produkte in der Datenverarbeitung

Founded in 1972 by Wellenreuther, Hopp, Hector, Plattner and Tschira
– Renamed in 1977 – Before 1977 : Systems Analysis and Program Development (German : Systemanalyse und Programmentwicklung)

• •

SAP is both the name of the Company as well as their ERP Product SAP system comprises of a number of fully integrated modules, which covers virtually every aspect of the business Three systems developed : R/1, R/2, R/3


Steps to Strategic ERP
En terpr ise R esou rce Pl an ni ng is evolved through these stages …
Enterprise Resource Planning Inter-Enterprise Co-operation Collaborative Business

Create Strategic Value Total Company Value Automation Efficiency and Control

80’s R/2

90’s R/3

Today mySAP ERP

Evolution of ERP

For Over 30 Years, SAP Has Been Driving ERP – and They Continue to Do So…
ERP Rapid Adoption
Companies start to adopt ERP on a massive scale


E-Business is now seen as an extension of ERP, not a replacement. SAP is leading the new industry standard for collaborative business applications. Hype: ERP = Old E-Business = New ERP = The Business Software Industry
The approach that SAP established becomes industry standard. New competitors enter the market. Trends seemed to indicate that ERP was an out-offashion model

SAP Invents Real-Time ERP
SAP defines and establishes a new approach to Integrated Standard Business Software.






Evolution of SAP


Quiz Time

• SAP R/3 client server architecture evolved in year___________. • Which is the latest SAP product?
– mySAP ERP – mySAP Business Suite – with one step business


Quiz Time

• SAP R/3 client server architecture evolved in year 1992 • Which is the latest SAP product?
– mySAP ERP – mySAP Business Suite – with one step business


SAP R/3 Architecture

3 Tier Client / Server Architecture
• The SAP R/3 architecture is based on a 3-tier client/server principle – Presentation Server – Application Server – Database Server • • Dedicated Servers are linked by Communication Networks Perform tasks without sacrificing data integration and processes within the system, as a whole


SAP R/3 System Architecture (Contd...2)


Overview of Presentation & Database Servers
• The Presentation Server
– – – – – GUI only At workstation Very light Sends requests to application server Obtains screens from application server and displays

The Database Server
– Interface between application server and RDBMS – Also holds the vendor specific DB driver


SAP R/3 Conceptual Areas SAP Conceptual Areas

Application Area
(Initiate and execute SAP transactions) (Functional)

Basis Area
(The technical administration of the system) (Authorizations/Ids/etc)

Development Area
(1. A developer’s workbench 2. Create & Test ABAP/4 programs) (Technical)


Systems in R3
Transport Request

Development System (DC)

Quality System (QC)

Production System (IC)

Client 110 100 etc..


Clients in R/3
• The Logon Client
– 3 digit number ( 000 to 999) – Helps maintain independent sets of data within the same R/3 system

Client mechanism and handling


Clients in R/3


R/3 Technology Environment
UNIX Systems Bull IBM Digital SNI HP SUN Bull/Zenith Compaq Data General ... Digital NCR HP (Intel) Sequent IBM (Intel) SNI IBM AS/400 IBM S/390

Operating AIX Reliant systems Digital UNIX UNIX (SINIX)

Windows NT





DB2 for OS/400

DB2 for OS/390

Dialog SAPGUI Languages

Windows 3.1, Windows 95, Windows NT, OSF/Motif *, OS/2 Presentation Manager (PM), Macintosh *, Java ABAP/4, C, C++, HTML, Java

Platforms and Databases supported by R/3
Operating Systems Supported Hardware Supported Front ends Supported Databases


IBM SNI SUN Digital HP Bull

Win 3.1/ 95 / NT OSF / Motif OS/2 Macintosh Win 3.1 / 95 / NT OSF / Motif OS/2 Macintosh

DB2 for AIX Informix – Online Oracle 7.1 ADABAS D Oracle 7.1 SQL Server 6.0 ADABAS D

Windows NT

AT&T Compaq Bull / Zenith HP (Intel) SNI IBM (Intel) Digital (Intel) Data-General



Win 95 OS/2



Client Server Benefit


Quiz Time
Match the following
Presentation Server Application Server 3 Digit number Client Testing/ UAT Unix Systems Authorizations Windows Basis Quality System GUI Oracle Client Business Administration

Quiz Time
Match the following
Presentation Server Application Server 3 Digit number Client Testing/ UAT Unix Systems Authorizations GUI Business Administration Client Quality System (QC) Windows Basis


SAP R/3 Modules

SAP Modules

SD – Sales and Distribution MM – Materials Management PP – Production Planning

FI – Financial Accounting



CO – Controlling AM – Asset Management

QM – Quality Management PM – Plant Maintenance WM – Warehouse Management


HR – Human Resources WF – Workflow PS – Project System


SAP R/3 Application Modules
• • • • • • • • • • • Financial accounting (FI) Controlling (CO) Asset management (AM) Materials management (MM) Sales and Distribution (SD) Production Planning (PP) Quality management (QM) Plant maintenance (PM) & Customer Service (CS) Project system (PS) Human resources (HR) Workflow (WF)


Module Functionalities

MM Material Procurement Inventory Management Batch Management Goods inspection Invoice Verification

PP BOM/Work Center/Routing MRP Capacity Evaluations Production Orders QM in production

SD Inquiry processing Sales Order Processing Delivery Processing Billing

FI General Ledger Accounts Payable Accounts receivable Cash management

CO Cost Center Accounting Product Costing Order Contribution Analysis


Quiz Time
Match the following
Financial Accounting Controlling Materials Management Sales & Distribution Production Planning Project System Inventory Management Shop Floor Control Financial Reporting Profit center Accounting Billing Activity monitoring Asset Management


Quiz Time
Match the following
Financial Accounting Controlling Materials Management Sales & Distribution Production Planning Project System Asset Management & Financial Reporting Profit center Accounting Inventory Management Billing Shop Floor Control Activity monitoring


Module FI – Financial Accounting
• External reporting of
• • • General ledger Accounts receivable/payable Sub-ledger accounts

with a user-defined Chart of Accounts • Key elements
• • • • • • • General ledger Accounts payable Accounts receivable Asset Management Special Purpose Ledger (FI-SL) Legal consolidation Accounting Information System


Financial Accounting

Foreign exchange management Finance information system


Management of secureties and loans

Cash management and forecast

Accounts payable

Bank accounts Receivables

Accounts receivable

General Ledger
Invoice verification Extended General Ledger

Credit management


Module CO – Controlling
• • • Represents the flow of cost and revenue Instrument for organizational decisions Key elements of the CO application module include :
• • • • • • • Cost center accounting Product cost Planning Product Costing Profitability analysis Profit center accounting Activity based costing Enterprise controlling


Module SD – Sales and Distribution
• Optimize tasks/activities in
• • • Sales Delivery Billing

Key elements of the SD application module include :
• • • • • • • • • Pre-sales support Inquiry processing Quotation processing Sales order processing Delivery processing Warehouse management Billing Credit Management Sales Information system

Sales and Distribution Processing
Sales activity



Inquiry Quotation Contract Scheduling agreement


Delivery free of charge

Subsequent delivery free of charge

Sales order



Debit memo Invoice Credit memo


Module MM – Materials Management
• Supports
• • Procurement Inventory

Key elements
• • • • • • • • Materials procurement (purchasing) Inventory management Invoice verification Material valuation Vendor evaluation External Services management Purchasing Information System (PurchIS) Inventory Controlling Information system


Materials Management
Material Special stock Batch Vendor/one-time customer Purchasing info record Service specifications Workflow Optical archive Texts Mail Communication Classification Documents Conditions

 Purchase requisition
  


 RFQ/Quotation
  

Purchasing information system Vendor evaluation

MRP Direct requisition Release procedures

Third-party order Requirements

Material/service Price comparisons Price comparison list Purchase orders Outline agreements Scheduling agreements

 Purchasing
  

Service/ Spare Parts Service / Inspection QM spare parts lot G/L accounts Cash management and forecast Fixed assets Cost center / Budget Project


    

Goods receipt/issue Transfer posting Quantities and values Physical inventory Storage bins

 

Check and post Price update

Module PP – Production Planning
• • To plan and control the manufacturing activities Key elements
• • • • • • • • • • • • • Bill of Material (BOM) Routings Work Centers Sales and Operations planning (SOP) Master Production Scheduling (MPS) – Capacity Planning Materials Requirement Planning (MRP) Shop Floor Control (SFC) Production orders Product costing, activity-based costing Work in process Kanban Production planning for process industries (PP-PI) Repetitive Manufacturing

Production Planning
SD PP Sales and Operations Planning Demand management / MPS Material requirements planning Detailed Schedeling and Planning Capacity planning Shop floor control Costing Information system

Project Networks


Sales Shipping Billing


PM SD Maintenance Repairs Plant maintenance QM SD Inbound Raw Material Finished Goods


MM SD Purchasing Warehouse Invoice verification


Financial accounting


Cost accounting


Human resources

Module QM – Quality Management
• Supports
• • • • • Quality planning Inspection Control for manufacturing Costing Procurement

Key elements
• • • • Quality planning Quality during procurement, production, distribution Quality Management Information - Quality inspection Information System (QMIS)


Module PS – Project System & HR – Human Resource
• PS – Project Systems
• Support planning, control, & monitoring of long term highly complex projects with defined goals • Project WBS – Plan • Budget & Monitor • Network Management • Activity monitoring, Material Planning, Milestones, Capacities Scheduling • Project Management Information System

• Key elements

HR – Human Resource
• Key elements • Recruitment • Payroll & Time management • Travel Expense accounting & Benefits • Workforce planning & Training administration • Organization management

Module WF – Work Flow
• • • To integrate SAP R/3 with cross-applications Support tool for all modules Automates business process
• • • As events occur that trigger a process, the Workflow manager initiates a Workflow item Using the process logic, data and documents are incorporated at each step Using the processing rules, the Workflow manager routes the item to the appropriate role (location, person, unit, etc....).

• Posting a PO will trigger automated mail to sales support for customer service.


Quiz Time
• • Is Industry solutions an SAP module like FI/CO/MM etc? True/False
– PP Supports procurement and Inventory – FI Handles project budgeting and monitoring – WF management is a support tool for all modules


Quiz Time
• Is SAP - Industry solutions a module like FI/CO/MM etc? NO True/False
– PP Supports procurement and Inventory (False – MM Supports these functions) – FI Handles project budgeting and monitoring (False – PS handles these functions) – WF management is a support tool for all modules (True)


IS – Industry Solutions
• Combines SAP R/3 application modules to additional industryspecific functionality • Result of the research by industry Centers expertise (ICOE)


mySAP Industry Solutions (Some Examples)
• • • • • • • • • • • • SAP for Aerospace & Defense SAP for Media SAP for Automotive SAP for Mill Products SAP for Banking SAP for Mining SAP for Chemicals SAP for Oil & Gas SAP for Consumer Products SAP for Pharmaceuticals SAP for Engineering, Construction & Operations SAP for Professional Services • • SAP for Insurance SAP for Utilities • • • • • • • • SAP for Healthcare SAP for Public Sector SAP for High Tech SAP for Retail SAP for Higher Education & Research SAP for Service Providers SAP for Industrial Machinery & Components SAP for Telecommunications


SAP Product Overview

Evolution of SAP products

mySAP ERP R/3 Enterprise
Web AS

Solutions mySAP CRM mySAP SCM mySAP HR mySAP PLM ………..

mySAP Business Suite


SAP NetWeaver

•Easing Upgrade Plans & Providing Transition Options •Bringing benefits of SAP Netweaver into installed base •New Customers have more entry options & receive world –class ERP


Evolution of SAP products


my SAP Solutions

my SAP Business Suite



Financials HR Corporate Services Operations


mySAP Solutions



mySAP Financials


mySAP HR Corporate Services Operations


Adaptive Business Solutions


my SAP Business Suite



mySAP Financials mySAP HR Corporate Services Operations

SAP NetWeaver Application Platform ( Web As) People Integration (Portal) Information Integration( BI,MDM) Process Integration (XI)

mySAP Solutions & Netweaver
• • • • • mySAP CRM mySAP SRM mySAP SCM mySAP PLM SAP Netweaver


My SAP Customer Relationship Management (CRM)

CRM Solution Map


CRM – Holistic view


Where does a CRM solution fit? Who What
Marketing Sales Service
Use a CRM Solution to complete the Cycle




Fulfill Transact

Workpl ace Which way How
Internet Mobile Telephony




CRM Component Landscape Portal Users OLTP R/3 System

CRM System

BW As one big logical box Internet

Mobile Clients

Telephone Callers



CRM Internet Sales


B2C Scenario Internetselling


BBP Scenario

Business Partner

B2R Scenario


Service module within CRM
• Service Planning
• Proactively engage customers with the correct resources at the most beneficial times

Customer Care
• Provide customer with 24/7 accessibility from all communication channels with precise and consistent informationon

Installed Base Management
• Maintain an accurate, up-to-date record of a customer’s products and installations to facilitate service and anticipate customer requirements


Mobile Sales module within CRM
• Suite of tools tailored to the needs of the offline mobile sales force
– Provides an integrated view of customers, prospects, products, services, competitors, activities, opportunities, quotations, orders, etc. – Heavy cross-referencing for easy navigation

Facilitates the sales process by
– Effectively managing customers and prospects – Providing appropriate customer, product and competitive information – Determining product and pricing configurations – Managing sales projects across sales teams – Generating presentation and proposals


Quiz Time

• What is the latest version of mySAP CRM • Name the three service modules with in CRM


Quiz Time

• What is the latest version of mySAP CRM (Version 5.0) • Name three service modules with in CRM
– Service Planning – Customer care – Installed base management


My SAP Supplier Relationship Management (SRM)

SRM Solution Map


Key Components of mySAP SRM
mySAP SRM – eProcurement mySAP SCE Supplier Collaboration Engine

• Enterprise Buyer Prof 3.5
• Business Inf. W’house 3.0B • Requisite Bugs Eye 3.5 • Requisite eMerge 3.5 • Enterprise Portal 5.0

• Supplier self services 1.0 • Bidding Engine 3.5 • User Management 3.0

Exchange Infrastructure

Content Integrator


Key Components of mySAP SRM
• Strategic Sourcing
•Sourcing analytics: Helps provide analytics based on supplier location, line of business •Supplier evaluation: Helps you evaluate the supplier base within the organization systems and external market places to identify and select supplier to ensure reliable & uninterrupted supply •Request for quotation and auctions: Provides electronic auctioning and bidding tools to compress sourcing cycle times •Contract management: Helps create and manage value and quantity contracts

• Operational Procurement
•Self-service procurement: Enables decentralizing procurement process within organization, without diluting the control •Plan-driven procurement: Enables automatic purchase order generation for stock materials across the integrated supply chain •Services procurement: Enables service procurement process to be managed


Key Components of mySAP SRM….Contd.

Supplier Enablement
•Supplier portal: Provides portal features for suppliers to manage their product data and orders •Supplier connectivity: Provides capability to connect multiple suppliers through XM_based document exchange

• Content Management
•Content consolidation: Provides capability to consolidate product and vendor information •Catalog content management: Provides capability to manage OCI compatible catalog with tools for data import, data edit and a search engine


Quiz Time

Name any one key component of mySAP SRM Solution map


Quiz Time

Name any one key component of mySAP SRM Solution map
– Following are the three key components of mySAP SRM
• Strategic Purchasing & Sourcing • Operational Procurement • Supplier Collaboration


My SAP Supply Chain Management (SCM)

SCM – Solution Map


SAP APO (Advanced Planning and Optimizing)
Flexible and Adaptive Planning, Integration with CRM, SRM and PLM

SAP ICH (inventory Collaboration Hub)
Collaboration with Suppliers

SAP EM (Event Management)
Monitor, alert and resolve exceptions


Typical SAP SCM Solution-scape
Dominant source of Master Data in SAP SCM, destination of transaction data like planning outputs or Availability Checks for Execution systems

SAP SCM Transaction Data Core Interface Master Data
Module includea Demand Planning, SNP & Deployment, PPDS, GATP, TPVS and TLB Planning system where selective Master data maintained and sourced from R/3

Core interface SAP CRM, SAP SRM and SAP PLM
Planning Outputs include Forecasts, SNP or PPDS Planned Orders, Stock Transfers and Production Orders

Legacy Systems


One-on-One comparison
i2 Technologies (Tradematrix SCM) SAP SCM ORACLE APS Manugistics (Networks SCM)


Demand Planner/Demand Management Demand Fulfillment

Demand Planner

Oracle Demand Planner

Demand Management

ATP and Fulfillment


Oracle GOP (Global Order Promising)

Fulfillment Management

Material and Resource planning

Supply Chain Planning

SAP SNP (Supply Network Planning)

Oracle ASCP (Advanced SCP)

Master Planning

Manufacturing Planning

Factory Planning

PP/DS (Production Planning and Detailed Scheduling) TP/VS (Transportation Planning/Vehicle Scheduling) -84-

Oracle Manufacturing Scheduling

Manufacturing Planning and Scheduling Logistics Management Solutions


TMS (Transportation Management Solutions)

Oracle Transportation

mySAP Product Life Cycle Management (PLM)

PLM Solution Map


SAP Netweaver

A Roadmap for Web Services


Services are changing SAP’s Product portfolio


From Basis to WAS


Integration is the Key Challenge
Business Drivers
Document Mgmt Call Center Market Analysis

Extended Value Network Increased Market Dynamics

Integration costs are high
Long integration projects IT environments become increasingly rigid Lots of heterogeneous systems



Pressure on IT increases
Must leverage existing investments Must support new business processes quicker Must reduce total cost of ownership (TCO)

Trading E-procurement Technical systems PLM


How to Address the Integration Challenge
Reduce Complexity • Minimize the number of connections
through hubs
Document Mgmt Call Center Market Analysis

•Use only one platform to integrate all people, information, and systems

Reduce Cost Integration

•Deliver .NET and J2EE interoperability •Deliver adaptors for ISV products •Deliver products, not projects


Increase company performance
•Increase ease of use, scalability and adaptability

Trading Technical systems PLM


•Increase business process flexibility by using an Enterprise Services Architecture


The fundamental Web services standards are supported by the Web Application Server (Web AS), which is the basis for all other NetWeaver components

SAP NetWeaver
The integration and application platform for lower TCO

Unifies and aligns people, information and business processes
Integrates across technologies and organizational boundaries A safe choice with full .NET and J2EE interoperability

The Business foundation for SAP and partners
 Powers business-ready solutions that reduce custom integration It’s Enterprise Services Architecture increases business process flexibility


SAP NetWeaver in Detail (SAP Internal View)
Product components and killer features
SAP Mobile Infrastructure
Tight coupling and alignment with SAP business solutions

SAP Enterprise Portal
Business packages Collaboration

SAP NetWeaver
People Integration Composite Application Framework
Multi-channel Access Portal Collaboration

SAP Business information Warehouse
Business content Tight integration to Sap Open architecture (Crystal, Accential )

Life cycle Management

Information Integration
Bus. Intelligence Knowledge Mgmt Master Data Management

Master Data Management
Coming in 2003

Process Integration
Integration Broker Business Process Management

SAP Exchange Infrastructure
Proxy generation and mapping tools Integration directory SAP’s ability to execute

Application Platform
J2EE ABAP Multi-channel Access

SAP Web Application Server
Proven, scalable, comprehensive toolsets Leverage existing infrastructure/skillets -95-

SAP Solutions Powered by SAP NetWeaver
Business content makes the business foundation


SAP Organizational units

Business Scenarios – Main Elements


Organizational Structure in SAP

Production Planning

Financial Accounting
Company Code


Controlling Area


Human Resources
Personnel Area

Sales and Distribution
Sales Area

Materials Management
Purchasing Organization


Company Code


Organizational Structure - Levels


Organizational Structure – Business Functions


Enterprise Structure - Technology


SAP Organizational Structure: Cardinality
Client Chart of Accounts
Purchasing Group

Company Code

Purchasing Org.


Sales Organ.

Shipping Point

Storage Location

Distribution Channel

Sales Office

Sales Group

Loading Point




Quiz Time
• Which is not a part of SAP Business Scenario main Elements
– Master Data – Organizational Unit – Transaction – Document – All the above

Answer True or False
– One Chart of accounts can be assigned to many Company Codes – A plant can be assigned to many Company codes


Quiz Time
• Which is not a part of SAP Business Scenario main Elements
– Master Data – Organizational Unit – Transaction – Document – All the above

Answer True or False
– One Chart of accounts can be assigned to many Company Codes (True) – A plant can be assigned to many Company codes (False)


Organizational Elements in FICO

Organizational Units in R/3 FI


Overview: Organizational Elements in Accounting


Organizational Elements in Logistics

Overview: Organizational Elements in Logistics




Quiz Time
• State True/False
– Company is obligatory in an organization structure

Fill in the blank
– Unit responsible for procurement of materials/services and negotiating with vendors is called ____________.


Quiz Time
• State True/False
– Company is obligatory in an organization structure (False – Company code is obligatory)

Fill in the blank
– Unit responsible for procurement of materials/services and negotiating with vendors is called Purchasing Organization


Organizational Elements in Sales







Quiz Time
Fill in the blanks • Sales area is a combination of _____________, ________________ and _______________.


Quiz Time
Fill in the blanks • Sales area is a combination of
– Sales Organization, – Division and – Distribution Channel



Logging on to SAP System

Logon pad with different systems




Adding to favorites

Steps to add transaction to favorites Step I: Select the transaction you want to add to favorites Step II: Right click on the transaction you want to add to favorites Step III: Select Add to favorites.






General Settings

Global Settings (at Country level)
• • Variants Calendar – Public Holidays – Holiday Calendar – Factory Calendar • • Unit of Measurements Currencies – Currency codes – Conversions (quotations) – Exchange Rate Type – Rates – Rounding rules


The Variant Principle


• • Define Public Holidays Define Holiday Calendar
– A combination of a yearly 12-month calendar and a list of all public holidays that fall within a calendar year. – Gives an overview of all working days and all days off for a calendar year. It can be created to cover a validity period of several years. – Can be defined according to the country or region in which they are to be implemented, and adapted to suit individual business requirements


• Define Factory Calendar
– Calendar in which working days are numbered sequentially. – Defined on the basis of a public holiday calendar. – Validity period of a factory calendar must be within the validity period of the public holiday calendar. – The weekdays that are working days must also be specified in this calendar. – Examples: • Monday through Friday are working days. • Saturday, Sunday and public holidays are non-working days.


Unit of measurement
• • • • • • • Enables calculations with quantities and physical units. Units of measurement are needed for internal conversions (such as kilogram <-> gram, but also centimeter <-> inch). The international system of units (SI) is used for this. UOMs are held centrally in the SAP System for all applications. Conversion factors are stored in the system with a unique internal key. Unit of measurement can be created according to requirements. CAUTION: Extra care to be taken for any creation as this global setting can affect the whole system performance


• • Legal means of payment in a country. You can manage ledgers in two parallel currencies in addition to the local currency


Currency settings
• Currency codes – SAP maintains about 187 currencies. If any transaction in a new currency will happen for the organization, that currency to be maintained • Standard quotation – Can specify direct or indirect quotation. System by default will take direct quotes. • Conversion factors – Mention the conversion for currency to currency. For example, INR To Yen will 1:100 • Rounding rules – ensures that the amounts in this currency are always rounded to this unit

Exchange Rate Type
• • Exchange Rate Type is used for different business purposes where multiple rates can be maintained for a pair of currencies The following exchange rate types exist
– Buying rate (G) – Bank selling rate (B) – Average rate (M) – Historical exchange rate – Key date exchange rate

• •

Default exchange rate types can be maintained in document types For posting and clearing, the system uses the exchange rate type M (average rate). This exchange rate type must be entered in the system and you must also enter the exchange rates for this type.

Exchange Rate
• Exchange rates in the system for the following purposes
– Posting and Clearing – To translate amounts posted or cleared in foreign currency, or to check a manually entered exchange rate during posting or clearing. – Exchange Rate Differences – To determine gains or losses from exchange rate differences. – Foreign Currency Valuation – To valuate open items in foreign currency and foreign currency balance sheet accounts as part of the closing operations. – Valuation of Purchase Documents, Sales documents and Commitments • Exchange rates maintained for a exchange rate type for an

effective date between two currencies

Quiz Time
• Fill in the blank

– The difference between ____________ and ____________ is called spread. – SAP maintains ___________ number of currencies.


Quiz Time
• Fill in the blank

– The difference between Buying rate and Selling rate is called spread. – SAP maintains 187 number of currencies.


Thank You!

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